If the Australian Government moves ahead with its plans to force internet service providers (ISPs) to retain customer data for two years just in case law-enforcement agencies need it, Optus has warned that the cost to set up these systems could be passed on to consumers.

David Epstein, the head of regulatory affairs at Australia's second-largest telecommunications company, Optus, told ZDNet that if the government moves ahead with these proposals and doesn't share the cost for building infrastructure to collect and store the data, this could be passed on to customers.

"Someone has to bear the costs of all of these things. The more detailed they are, the more expensive they are. It's not just a simple cost that can be absorbed," he said. "To do these things to the degree some people want to do them is a very, very costly exercise requiring massive storage capacity, let alone the ability to filter the information itself."

Epstein's comments were reflected in industry submissions to the proposal. The Communications Alliance estimated that the cost of data retention could be in the range of "tens to hundreds of millions of dollars" and if source and destination IP addresses are required to be included, setting up technology to capture this information would cost between AU$500 million and AU$700 million. The addition of a single data element could increase this figure by tens of millions of dollars.

Although Attorney-General Nicola Roxon was initially hesitant about the data-retention component of the review, in a speech to the Security in Government conference in Canberra this morning, Roxon showed that she has warmed to the proposal, stating that data retention is critical for law enforcement to do its job.

"Many investigations require law enforcement to build a picture of criminal activity over a period of time. Without data retention, this capability will be lost," she said.

"The intention behind the proposed reform is to allow law-enforcement agencies to continue investigating crime in light of new technologies. The loss of this capability would be a major blow to our law-enforcement agencies and to Australia's national security."

Although Roxon said that the government would take onboard the public discussion surrounding the proposals, her speech indicated that the government appears to be intent on bringing in data-retention legislation.

"We cannot live in a society where criminals and terrorists operate freely on the internet without fear of prosecution. We cannot allow technology to create a 'safe haven' for criminals, or a 'no-go' zone for law enforcement," she said.

"But this does not mean unfettered access to private data, either. What it does mean are carefully drafted, tested, and oversighted national security laws — and this is what I'm focused on delivering."

At a press conference after the event, Roxon told journalists that she didn't believe consumers would be forced to pay in order for telecommunications companies to adapt to the changes.

"It's something that's now part of doing business in a changing technological world. And we are very open in our discussions with the industry about what will be a normal part of their business, what the legal framework will be, and we're taking seriously the issues that they're raising with us as well."

The parliamentary committee conducting the review of the legislation will hold its first hearing tomorrow in Melbourne, with the Victorian Privacy Commissioner, Macquarie Telecom, South Australian and Victorian Police, and the Institute of Public Affairs all speaking.